The penny was declared dead this week at the age of 232-years-old, courtesy of the Trump administration. Now it’s Capitol Hill’s turn to pick up the tab. Because the penny hasn’t gone quietly.
Congress has been working on how to eliminate the penny for a good chunk of 2025 — particularly the House Financial Services Committee. But lawmakers and staff now find themselves scrambling to contain the fallout of a penny-less world.
Penny dread. Here’s the problem Congress is faced with: Retailers and banks have become increasingly alarmed by the penny shortage, which began roughly in September.
The Federal Reserve has stopped accepting pennies at many of its coin distribution locations. That has reduced circulation of the penny far more rapidly in the United States than policymakers and Congress anticipated.
Without pennies, retailers processing cash transactions have been faced with a choice: round prices up to the nearest nickel, or round down? The question is more complicated than you might think.
Several states prohibit retailers from charging more for cash transactions, which would prevent merchants from rounding cash transactions up. But federal laws tied to food benefits, including SNAP, prohibit participants from paying more than other consumers. Rounding cash payments down could result in SNAP customers paying more than cash customers for groceries.
Committee look. The House Financial Services Committee has been doing most of the work on Capitol Hill in this area. The panel advanced Rep. Lisa McClain’s (R-Mich.) Common Cents Act in July with bipartisan support. That bill laid out how to phase out the penny while also changing the technical definition of a nickel to make it cheaper to produce.
But specific language inside that bill that would have addressed the round-up, round-down issue was stripped before the bill was cleared by the committee due to conservative opposition.
A House GOP aide familiar with the negotiations said the panel has moved away from mandating a particular approach to transaction rounding and will introduce provisions that will give retailers a “safe harbor” for processing such payments. The main thing retailers want is a federal preemption from conflicting state rules.
House aides say the committee could advance these fixes as soon as the end of the month, certainly before the year is over, and pass the bill on suspension.
Senate behind. The Senate Banking Committee is tracking this issue but has largely deferred to the House.
In the meantime, Sen. Elizabeth Warren (D-Mass.) will demand guidance from the Fed, Treasury and U.S. Mint in the coming days, according to another Senate Banking aide.
